Planning to buy a rental home in the UK? One of the first big choices is whether the property goes in your own name or into a company.
A buy to let limited company can deduct mortgage interest in full and pays a lower rate of tax on profits you leave in the business. Corporation Tax, dividend tax, pricier mortgages and stamp duty all complicate the picture, though. This guide compares both routes with 2026/27 figures and the property tax rises announced for April 2027, then shows you how to set a company up.
- Companies deduct mortgage interest as a cost; individual landlords get a basic-rate tax reduction instead.
- In 2026/27, a qualifying company pays 19% on profits up to £50,000 and 25% above £250,000. The limits shrink with associated companies or a short accounting period.
- Dividends you take out are taxed at 10.75%, 35.75% or 39.35% after a £500 allowance.
- Individual property income tax rates are scheduled to rise to 24%, 44% and 49% from April 2027 under the Budget 2026 announcement, subject to the relevant devolved tax arrangements.
- Companies pay higher-rate purchase tax on residential property, and the rules differ in England and Northern Ireland, Wales and Scotland.
- Moving property you already own into a company can trigger purchase tax and Capital Gains Tax.
What is a buy to let limited company?
A buy to let limited company is a private company that buys and lets residential property. The company owns the home, receives the rent and pays Corporation Tax on what is left after costs. You run it as a director and own it through your shares.
What an SPV is, and why lenders prefer one
Most lenders want the borrower to be a special purpose vehicle, or SPV. In plain terms, that is a company with one job: holding property. If the same company also runs a trade, such as consultancy, the lender finds the risk harder to assess, and many will refuse. Keeping the buy to let limited company separate keeps the accounts tidy and the choice of mortgages wider.
Who owns what
The property belongs to the company, and you hold shares in the company. That split has real effects. The rent is company money, which reaches you only as salary, dividends or repayment of money you have lent it. You also can’t move into the property or spend from the company account as if it were your own.
Pros and cons of buying property through a limited company
A company can mean less tax on profits, but it brings extra costs and paperwork. The table puts both sides together.
| Advantages | Disadvantages |
|---|---|
| Mortgage interest is deducted as a cost | Dividend tax when you take profit out |
| Corporation Tax from 19% for qualifying companies | Mortgage rates and fees are often higher |
| Profits can stay in the company to fund more purchases | Yearly accounts, Corporation Tax return and confirmation statement |
| Shares can pass to family members over time | The company gets no £3,000 Capital Gains Tax allowance |
| Outside the announced April 2027 rise in individual property rates | Lenders usually ask for personal guarantees |
Personal ownership vs a company: the tax compared
Whether a buy to let limited company saves you tax depends on three things: the rate charged on profit, how mortgage interest is relieved, and the tax you pay when money comes out.
Corporation Tax vs Income Tax
| Owner | 2026/27 | Announced for 2027/28 |
|---|---|---|
| Individual, property income (basic, higher, additional) | 20%, 40%, 45% | 24%, 44%, 49% (announced, not yet law) |
| Company | 19% up to £50,000; 25% above £250,000; marginal relief in between (if eligible) | No change announced |
Sources: GOV.UK Corporation Tax rates and Propertymark’s report on the 28 October 2026 Budget, checked 3 November 2026. The new property rates take effect from 6 April 2027 only once Finance Bill 2026–27 is passed, and Scotland and Wales may set their own.
The 19% rate isn’t automatic for every buy to let limited company. Close investment-holding companies can’t use the small profits rate, but a company that mainly lets land to tenants who aren’t connected to it falls outside that rule, as HMRC’s manual at CTM03951 explains. Letting to your relatives can change that.
The £50,000 and £250,000 limits are also divided between associated companies and cut for an accounting period shorter than 12 months. If you already own another company, your buy to let limited company may be associated with it.
Mortgage interest: full deduction vs a tax credit
Individual landlords can’t set residential mortgage interest directly against rent. They usually get a basic-rate tax reduction on eligible finance costs instead, within the limits set out in GOV.UK’s guidance on residential landlords. For 2026/27 that reduction is 20%.
From 2027/28 it is expected to follow the announced 24% property basic rate, once the legislation and devolved arrangements are in place. A qualifying buy to let limited company simply deducts the interest as a business cost when it works out its taxable profit.
Getting the money out
Profit made by a buy to let limited company belongs to the company. To use it personally, you can take:
- Dividends: the first £500 is tax-free, then 10.75%, 35.75% or 39.35% applies in 2026/27, according to LITRG’s dividend guide;
- Director’s loan repayments: the company can generally repay genuine amounts it owes you without creating dividend or salary income, as long as the repayment doesn’t exceed the outstanding loan balance;
- Salary: a deductible cost for the company; and
- Pension contributions: paid by the company, often deductible, but tied up until you can draw your pension.
Salary paid by a buy to let limited company has to run through PAYE where the rules require it, and it can also bring employer National Insurance costs. Which mix works best depends on your other income and personal situation.
Owned personally, 2026/27: taxable profit £21,000 × 40% = £8,400, less the 20% finance cost tax reduction on £10,000 interest (£2,000) = £6,400 tax. Cash left: £11,000 − £6,400 = £4,600.
Owned personally, 2027/28: £21,000 × 44% = £9,240, less the 24% finance cost tax reduction on £10,000 interest (£2,400) = £6,840 tax. Cash left: £11,000 − £6,840 = £4,160.
Owned by a buy to let limited company: profit £11,000 × 19% = £2,090 Corporation Tax, leaving £8,910. If Helen keeps it in the company to buy more property, nothing else is due yet. If she takes it all as a dividend: (£8,910 − £500) × 35.75% = £3,006.58, so she keeps £5,903.
Both years use the same rent, interest and costs, and treat all the interest as an eligible finance cost. The 2027/28 figures use the announced rates. The company figures assume it qualifies for the small profits rate, has no associated companies and pays Helen no other dividends. Extra running costs and a higher mortgage rate are ignored, and they can narrow or reverse the gap.
How to set up a buy to let limited company: step by step
Setting up a company for buy to let can be done online in a day or two. Getting the details of your buy to let limited company right from the start avoids problems with lenders and HMRC later.
- Choose a name. Make sure no one else has it on the Companies House register.
- Decide on directors and shareholders. Many couples share ownership so each can receive dividends. Anyone holding more than 25% of the shares is a person with significant control (PSC). Holding more than 25% of the votes, having the right to appoint or remove most directors, or having other significant influence or control can also make someone a PSC, so check every condition when you register.
- Pick a SIC code. The code describes what the company does. 68209 (other letting and operating of own or leased real estate) is the one that usually fits renting out homes. 68100 covers buying and selling your own property, and 68320 covers managing property for others for a fee. No single code is required by every lender, and criteria vary, so check with your broker.
- Verify your identity. Each director must give a Companies House personal code when the company is registered, according to Companies House guidance.
- Register the company. The online fee has been £100 since 1 February 2026.
- Open a business bank account in the company’s name.
- Register for Corporation Tax within three months of starting business, which includes letting property, as NI Business Info explains.
- Arrange an SPV mortgage and landlord insurance in the company’s name.
| Cost | When | Notes |
|---|---|---|
| Incorporation | Once | £100 online at Companies House |
| Confirmation statement | Every year | £50 online |
| Accounts and Corporation Tax return | Every year | Accountant’s fee; depends on how many properties you hold |
| Mortgage arrangement fees | Each loan | Often higher than personal buy-to-let products |
Companies House fees as reported by Rapid Formations for filings from 1 February 2026.
Mortgages for a buy to let company
Fewer lenders will lend to a buy to let limited company, and their deals often cost more. These are the main differences:
- Personal guarantees: directors are usually asked to guarantee the loan, so your liability is less limited than the company’s name suggests.
- Deposit: commonly 25% of the price or more.
- Rental cover: the lender checks that rent covers the payment at a stressed interest rate. Company tests are often easier to pass than those for higher-rate individuals, because the interest is fully deductible.
- Rates and fees: often slightly higher than personal products. Criteria change, so talk to a mortgage broker.
Stamp duty and other property taxes for companies
A buy to let limited company pays the higher rates of Stamp Duty Land Tax on every residential purchase of £40,000 or more, even its first. GOV.UK’s guidance for corporate bodies confirms this means a 5% surcharge on top of the standard rates.
Where the property is matters. Stamp Duty Land Tax (SDLT) covers England and Northern Ireland. Wales charges Land Transaction Tax (LTT), and Scotland charges Land and Buildings Transaction Tax (LBTT). Each has its own higher rates and reliefs, so check the rules for the country you’re buying in.
- Example (England): on a £250,000 house, the higher rates charge 5% on the first £125,000 and 7% on the next £125,000, a total of £15,000. An individual buying an additional home pays the same.
- 17% rate: a company buying a home for more than £500,000 can face a flat 17% SDLT rate. Relief may be available for a qualifying property rental business, but the conditions are strict. Never assume it applies: check how the company will use the property against the relief conditions before you buy.
- ATED: the Annual Tax on Enveloped Dwellings applies to company-owned homes worth more than £500,000. For 2026/27, the charge for a property worth £500,001 to £1 million is £4,600. For 2027/28, that charge is scheduled to rise to £4,750. A qualifying property rental business can claim relief, but the conditions must be met and an ATED return must still be filed.
- Selling: when a buy to let limited company sells a property, its gain is taxed through Corporation Tax, with no £3,000 annual exempt amount.
Already own property? Why transferring it is expensive
Moving a property you already own into a company counts as selling it at market value. The company normally pays purchase tax at the higher rates, and you may owe Capital Gains Tax on any growth in value since you bought it.
Incorporation Relief may postpone that gain when a qualifying business run by a sole trader or partnership passes to a company in return for shares. According to HMRC’s Capital Gains Manual at CG65700, the business must move as a going concern, generally with all its assets apart from cash.
Handing over an investment property or a passive portfolio doesn’t qualify automatically. Whether your letting activity counts as a business depends on the facts, and for transfers from 6 April 2026 the relief has to be claimed.
Remortgaging and early repayment charges add to the bill. For many landlords, a new buy to let limited company works better for future purchases than for homes they already own. Take specialist tax advice before relying on the relief or moving anything into a company.
Is a limited company right for you?
A buy to let limited company suits some landlords far better than others. Use this table as a starting point.
| More likely to suit you if… | Less likely to suit you if… |
|---|---|
| You pay higher or additional-rate tax | You’re a basic-rate taxpayer |
| You borrow heavily against the property | You buy mostly with cash |
| You plan to reinvest and grow a portfolio | You need the rent to live on now |
| You’re buying new property | You’d have to transfer existing property |
Buy to let company FAQs
Can a limited company buy a house to rent out?
Yes. A buy to let limited company can buy residential property in its own name, usually with a specialist SPV mortgage, and pays the higher rates of purchase tax when it does.
Can I live in a property my company owns?
Not without tax consequences. Living there rent-free or below market rent can create a taxable benefit, and most company buy-to-let mortgages don’t allow it.
How many properties do I need for a company to be worth it?
No fixed number of properties makes a buy to let limited company worthwhile. It depends on your tax band, how much you borrow and whether profits stay in the company. Even one mortgaged property can benefit a higher-rate landlord.
Can my spouse be a shareholder?
Yes. Spouses often hold shares in a buy to let limited company so dividends can use both people’s allowances and tax bands. The shares must genuinely belong to them.
What is a company let?
A company let usually means renting a home to a business, which then uses it to house staff. It isn’t the same as a company owning buy-to-let property.
Does Making Tax Digital for Income Tax apply to my company?
No. MTD for Income Tax applies to individual landlords and sole traders, not to a buy to let limited company. A company reports its rental profit through its accounts and Corporation Tax return.
Do I need an accountant?
It isn’t compulsory, but company accounts, Corporation Tax returns and dividend paperwork are more involved than a personal tax return, so most landlords use one.
Final Verdict: Is a Buy to Let Limited Company Worth It in 2026/27?
A buy to let limited company often saves tax for higher-rate landlords who borrow and reinvest, and the gap is likely to widen if the announced 24%, 44% and 49% property rates take effect in April 2027. It costs more to run, mortgages are dearer, and dividends are taxed when you draw money out. Model your own numbers first, and think of a company mainly for new purchases.
- Note down your rent, interest, costs and other income.
- Compare personal ownership with a buy to let limited company that keeps profit and one that pays it out.
- Ask us to model it: call 0116 4030595 or email info@majoraccountancy.com.
Already running a property company? Our tax service for limited company directors covers dividends and director’s loans, and our Capital Gains Tax service helps if you’re selling a property you own personally.
Why trust this guide
- Written by Shahinur Chowdhury, UK Accountant at Major Accountancy.
- Rates and rules checked against GOV.UK and HMRC manuals on 3 November 2026, with the April 2027 property rates shown as announced, not yet law.
- Includes a worked comparison for 2026/27 and 2027/28 that most guides leave out.
- General information only, not personal tax advice.
- GOV.UK: Corporation Tax rates and allowances
- HMRC CTM03951: Close investment-holding companies
- HMRC CTM03935: Small profits rate with associated companies
- Propertymark: Budget 2026 raises landlord taxes
- GOV.UK: Tax relief for residential landlords
- HMRC CG65700: Incorporation Relief
- GOV.UK: Stamp Duty Land Tax for corporate bodies
- GOV.UK: Higher rates for additional residential property
- GOV.UK: Annual Tax on Enveloped Dwellings
- Companies House: When you need to verify your identity
- NI Business Info: Register for Corporation Tax
- LITRG: Tax on dividends
- Rapid Formations: Companies House fees from February 2026